Questions about clunkers 30 July 2009

The government’s cash for clunkers program is creating its share of confusion among
the citizenry.

The program — dubbed CARS, for Car Allowance Rebate System — provides rebates
of $3,500 or $4,500 to consumers who trade in a vehicle with combined city/highway
18 miles per gallon or less and buy a more fuel-efficient new car or truck (full details
and rules are here).

CARS took effect over the weekend at more than 20,000 dealerships nationwide, and
the questions have been flying ever since.

One of the biggest head-scratchers concerns the revised fuel economy ratings the
Environmental Protection Agency quietly issued late last week in response to a
requirement in the CARS law that the ratings be more precise. The added precision
affected 164 models — 78 vehicles that used to qualify under the program now don’t,
and 86 vehicles that didn’t qualify now do.

A frustrated Barbe Roberts of Ventura was all set to trade in her clunker of a 1993
Toyota Camry — and its 18-mpg EPA-rated fuel economy — on a new vehicle. Then
the new figures came out and her car is now rated at an ineligible 19 mpg.

“I don't ask for help from the government, I don't even ask for help from my mother,”
Roberts said. “However, if something is out there that I could use and means the
difference between a new car and a used one, I like to take advantage of the program.
But changing the rules at the end stinks.”

She’s now back in the market for a used car.

There’s also a question surrounding what happens to cars that were traded in before the
revised mileage ratings were issued and that are now ineligible. (CARS “officially”
started July 1, and some deals were done before the government issued its detailed rules
Friday on how the program would work.)

Auto website Edmunds.com, which posted an alert on the new fuel economy ratings
Monday, called on the government to clear up the confusion.

“Consumers acting in good faith should not be penalized for undisclosed and last-
minute changes made by the government,” said Kevin Smith, Edmunds.com editorial
director.

Buyers are also complaining that some dealers are charging state sales tax on the full
sale price of the new vehicle. As we wrote about in a previous post, California
authorities have ruled that state and local sales taxes should be applied after the rebate
has been deducted.

(For more information, see the state Board of Equalization news release or call the state
Tax Service Center at [800] 400-7115.)

Then there’s the scam issue. The Federal Trade Commission issued a warning to
consumers about websites that may ask for personal information — such as name,
address and Social Security number — in exchange for details about the clunkers
program.

Several reputable sites, such as Edmunds.com and Kelley Blue Book’s kbb.com, are
offering information about the program. But the FTC said that websites seeking
disclosure of personal information should be reported to the agency at www.ftc.gov or
by calling (877) FTC-HELP. (The program’s official website, by the way, is
www.cars.gov.)

There have also been reports that the National Highway Traffic Safety Administration,
which is actually overseeing the clunkers program, has been swamped with calls from
dealerships seeking to register for the program, resulting in frustrating delays for some
dealers.

-- Martin Zimmerman

Photo: Junked clunker at Berlin, Vt., GM dealership. Credit: Associated Press

03:06 PM PT, Jul 29 2009 in Cash for Clunkers | Permalink | Comments (3) |
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Comments
There is also a lot of confusion about the insurance requirements for the trade-in. We've
posted insurance information on our Web site at www.iinc.org.

Posted by: Pete Moraga | July 29, 2009 at 04:14 PM